SAIC is the largest employee-owned research and engineering company in the USA. Boeing is the largest Aerospace manufacturer and the second largest defense contractor in the world. Therefore the guideline of the paper is to find out which company is more successful in operating profitability, risk management and assets utilization/cash flows.
Operating Profitability (2005-2006). It is known that SAIC provided improved technology to support the United States Department of Defense. SAIC has many private company clients is officially the 19th largest defense contractor. It is admitted that SAIC had to team up with Boeing in order to become the leading integrator on Army project with total revenue of $4 billion. Revenues for the 2006 fiscal year ended in January, 31, accounts $7.8 billion. The revenue increase of 8% compared with previous fiscal year is apparent. The operating income of SAIC is known to be $497 million in 2006 and $488 million in 2005. SAIC’s operating profit was $2,812 million and net profit was $2,562 million in 2005. (SAIC 2006) Concerning Boeing it is necessary to outline that it expects 36% increase in 2006 for aircraft deliveries. It is apparent that Boeing forecasts the boom, though not all its segments are enjoying earnings. Boeing’s operating profit increased up to $817 million and profits from delivering weapons system increased on 23%. Nevertheless, the profit margin decreased on 49%. Boeing’s net profits after taxes are $2,572 billion; profits from sales are $54,845 billion. It is seen that sales as well as net profits after taxes are considerably higher for Boeing, though the net profit margin is higher for SAIC. According to the Return on Total Assets Boeing’s profits are also higher as well as for total assets. ROA is four times higher. Therefore both companies have advantages and disadvantages, no apparent leader is presented.
Assets Utilization and Cash flows (2005-2006). The receivables turnover of SAIC is: sales – $7,792 billion, receivables – $1,517 billion and receivables turnover – 5.14. (SAIC 2006) The receivables turnover of Boeing is: sales – $54,845 billion, receivables – $5,246 billion and receivables turnover is 10.45. It is seen that in this aspect Boeing is better managed as its receivables turnover is two times higher than that of SAIC. (Boeing 2006) Total assets turnover of SAIC is: sales – $7,792 billion, total assets – $5,655 and total assets turnover is 1.38. (SAIC 2006) Total assets turnover of Boeing is: sales – $54,845 billion, total assets – $5,655 billion and total assets turnover is 0.91. (Boeing 2006) It is apparent that in assets utilization SAIC is more successful than Boeing and its turnover is significantly higher.
The cash flows of SAIC changed for the period of 2005-2006. SAIC’s cash flows from operating activities increased up to $296 million, though total cash provided by investing activities decreased to $313 million compared with $1602 million in 2005. SAIC is popularized in the market and investors agree to purchase its common and preferred stocks. It is known that the cash outflows increased up to $561 million. (SAIC 2006) Boeing also has had a good fiscal year in 2005. It means that the combined revenue increased by 5%. The cash flow was about $7.0 billion in 2005. In the result Boeing was able to repurchase 45 million shares of stock. Nevertheless, SAIC appears to be better managed in terms of cash flow policy. (Boeing 2006)
Risk management (2005-2006). Risk management of both SAIC and Boeing is professionally performed. The net income of SAIC is $927 billion, shareholders’ equity is $2,807 billion and the ROE is 33.02%.(SAIC 2006) The net income of Boeing is $2,572 billion, shareholders’ equity is $11,059 billion and the ROE is 23.26. (Boeing 2006) It is apparent from the figures that SAIC is able to generate more revenue with the invested money than Boeing. Nevertheless, Boeing proved to be the largest accompany according net income, because it is higher than that of SAIC. ROE is higher for SAIC, though shareholders’ equity is higher for Boeing.
SAIC Corporate Website. (2006) Retrieved October, 11, 2006, from http://www.saic.com,